Innovating on the Cheap

If ever there was an industry in need of innovation, it’s healthcare in India. This massive country is beset by a host of problems, including miniscule government spending on health care (4.5 percent of GDP, versus, for example, 16 percent in the United States) and poor basic hygiene and living conditions among the poor and uneducated. Add to that the fact that 70 percent of the population lives in rural areas without easy access to the most basic medical services — not to mention safe drinking water and adequate sanitation — and the needs seem nearly insurmountable.

But two speakers at the “Caring for Millions” conference, held in November and sponsored by the India Business Initiative of the Chazen Institute at Columbia Business School, have implemented models that fulfill some important requirements: one, they’re scalable – not just one-offs – and two, they connect primary and tertiary care in a way that’s efficient and cost-effective.

Hubs and Spokes

Ashok Seth, chairman of Fortis Escorts Heart Institute, is betting heavily on a hub-and-spoke model for delivering tertiary care to smaller cities rather than just in metropolitan areas. Through Fortis’s new venture, dubbed “Critinext,” remote patient monitoring systems have been set up in 10 remote areas in India, as well as in Bangladesh and UAE. Monitors at the patient”s bedside in rural hospitals link to a central command center which monitors patients in real time from Delhi. In a year's time, centers using the technology performed markedly better on several measures, including survival from cardiac arrest and mortality, despite only having a general physician on site to care for them.

The model goes to the core of a widely acknowledged problem in India: Too few specialists who are generally clustered in urban areas. The lack of ICU doctors is particularly acute: “we’re 60,000 ICU doctors short,” said Seth. Of the 5 million patients who need intensive care each year, about 500,000 die, and ten percent of the deaths are attributable to ICU mistakes because of lack of trained critical care doctors.

Then there is the expense. More than 75 percent of Indians pay for their own healthcare (for ICU patients the figure is 85 percent). With the nation’s per capita annual income at $1,500, 40 percent of ICU patients sell assets or borrow money to offset their bills. Many simply decline treatment, partly due to their allegiance to traditional healing methods (including homeopathy and faith healers). Still, prohibitive costs play a large role.

Fortis’s hub-and-spoke model gets at many of those issues. Under such a system, regional facilities can be staffed with less-experienced specialists and less-sophisticated equipment. Real-time monitoring and two-way communication enable minute-to-minute management of critically ill patients rather than just occasional advice.Even better, it's inexpensive: the setup costs less than US$10 per day to run. The patient also saves money by not travelling to another city for specialized treatment. That, along with management techniques borrowed from retail, such as peak pricing – diagnostic and CT scan centers are open 24 hours but charge less at night when demand is lower – is helping to make quality care available to more people.

Says Seth: “We’re not just achieving economics of scale; but enabling delivery of quality healthcare to smaller towns ”

An Eye on the Future

Both issues – access and affordability – are being tackled head-on by Aravind Eye Care, whose executive director, Thulasiraj Ravilla, also spoke at the Columbia Business School conference. In a nation where fewer than 15 percent of the populace have received any type of eye care and a whopping 80 percent of cases of blindness are deemed avoidable, Aravind takes the hub-and-spoke mode a step further. Partnering with local organizations such as Lions Clubs, it sets up “eye care camps” in remote locales at which villagers to receive a free- or low-cost eye exam. Thus far, camps have been set up in 47 villages, serving more than 22,000 patients. Of those patients, 749 were diagnosed with an eye problem and were referred for further treatment.

Ravilla calls this “active case finding,” and it’s an important step in keeping care confined to the primary level before symptoms – and costs – escalate to the point that tertiary care is required.

For people who are able to travel or live near an urban area, the company has installed 54 vision centers throughout southern India. In 2014-2015, it provided 3.5 million outpatient exams, 400,000 laser and surgical procedures, and 500,000 eyewear prescriptions. The model is proving effective: 90 percent of the care cycle is locally contained, and 50 percent of the services are provided free or with heavy subsidies. Those who need surgery or laser procedures are provided shuttle service to eye care hospitals at a nominal price. Moreover, cost-containment tactics such as telemedicine and emphasis on preventive care have enabled each of the centers to break even after their second year in operation.

Still, Ravilla is frank about the applicability of such a system. In his presentation, he posited three questions:

Can this be scaled with eye care?

Can this be replicated in other disciplines?

Can there by an integrated primary care model that supports tertiary care?

A strong, seamless distribution system is key, he says, and where all the money will come from remains a question mark.

One possible answer is private investors. In order for innovations such as Aravind’s to be attractive to capital markets, scalability is a must. “As you go down the chain to more primary and more local care, the quantity of transactions is fairly low. In tertiary care, you might get hundreds or thousands of patients coming in per day. Whereas in primary scale you might get 15 or 20 people per day.” Establishing systems and processes that will make entries into the market cost-effective will require economies of scale, he says — with a little altruism mixed in.

“Truly disruptive innovation has to be driven by purpose and passion,” he said. “Without it, you’re just achieving incremental improvement.”